Many a corporation misses massive opportunities by demanding to know “Where’s the ROI?” in cases where ROI is an inappropriate and misleading indicator. Permit me to explain why.
Return on Investment means different things to different people To some, ROI is a hurdle a project must achieve to warrant investment. To others, ROI is a way to coax people to make the business case for a proposal. Some treat ROI as a formula, others as a philosophy.
Typically, the higher you go in an organization, the more expansive the definition of ROI and the less reliance on it in decision-making. A $10,000 decision is likely to require ultraconservative estimates, solid arithmetic, and measurements in accordance with Generally Accepted Accounting Principles. For a $5,000,000 decision, corporate politics, intangible benefits, and gut feel may overrule the numbers. And at the $50,000,000 level, the numbers are at best a footnote to the real way executives make decisions.
Picture this: A CFO has calculated an ROI of 154% for Project A and 155% for Project B. His CEO must decide which project to back to the tune of $100 million. Can you really imagine the CEO will make the decision based on ROI?
“You can’t manage what you don’t measure” is nonsense. The vast majority of what senior executives manage is immeasurable. They make judgment calls; they play hunches. How else do you select the right people for key jobs? How else do you choose your partners? How else do you divine the future? Organizations pay senior executives handsomely to buy their ability to make wise choices in the absence of simple measurements.
Intangibles rule
Business enterprises exist to create value for their stakeholders. Once upon a time, value as profit was a good proxy for the value earned by investors. Profit, the proverbial bottom line, is the difference between revenue and expenses, and these relate back directly to changes in accounts on the balance sheet. Balance sheets record tangible assets: factories, land, trucks, and paperclips, things you can see and touch.
In 1982, intangibles accounted for less than a quarter of the value the U.S. stock market. By 1999, intangibles, the no-see-ums, made up more than 80% of the value of the market. Balance sheets do not record intangibles, things like know-how, customer relationships, and reputation. On the balance sheet, highly-skilled people have the same value as new hires: zero.
Imagine Google. Google’s book value, e.g. the stuff you can see and touch, is roughly $5 billion. Investors value Google stock at more than $13bmillion. The $125 billion bump is what investors are willing to bet that Google will get better and bigger. This is entirely intangible, i.e. not on the books and not on the bottom line.
If you were making decisions at Google, what would you pay attention? Would you do ROI calculations on what might impact the $5 billion? Or would you make decisions to impact the $130 billion?
Where’s the ROI from implementing interactive technology?
I’m going to take ROI back to its roots. Instead of using the conventions of 19th century accounting, I’ll define return as an increase in shareholder value.
When interactive technology (blogs, wikis, social software) is applied to an area for the first time, the results can be staggering. Consider these three examples where costs were negligible, and returns are counted in eight figures.
Three years ago, a staffer at Intel set up a wiki for sharing information among individuals throughout the company. It grew organically and has become a vital source of information throughout the company. Usage has surpassed a million page-views. The wiki is doing what knowledge management systems and intranets were supposed to do. The software was free. The wiki is self-maintaining. Benefits include time saved looking for things, less likelihood of using dated or inaccurate information, and accelerated ramp-up of new hires. If the system saves 30 minutes a week for its 20,000 active users, that’s more than 200 person-years, i.e. $30,000,000 or more in annual savings. The software was a free download. (Here’s a four-minute video on Intelpedia.)
Four thousand professionals at CGI receive news and updates in their specialties by subscription instead of foraging for research findings on their own. There’s less likelihood of important developments slipping through the cracks, and the consultants can bill at least one incremental half-hour a week per person with the time saved. The value of two thousand billable hours per week? Astronomical. Costs were minimal.
Tax preparer T. Rowe Price encouraged seasonal tax-preparation staff to contribute Frequently Asked Questions to a central repository. The central source of questions and answers enabled the 1,500 support staff to shave two minutes off the duration of the average customer phone call. The result? Better customer service and $15,000,000 in annual savings.
This is the tip of the iceberg. I plan to continue working on this topic and adding to the material already included in the un-book on Learnscaping.
Social media: terrible name for “let’s get together.”
Yes, folks, this is important. Social media — Facebook, Twitter, and other things you thought were for kids — are the way to stay connected and keep up with the world. They create “ambient awareness,” the feeling that you’re close to someone even when you are not.
Required reading for those who don’t yet get social media: Brave New World of Digital Literacy. Just read it. This article from the New York Times last Sunday is the best description I’ve read, and when it comes to social media, I’ve read lots.
I was a reluctant and late convert to the religion of social media and microblogging. I’m starting to get it now. It is about staying plugged in to other people facing a world of tumultuous change.
If your enterprise learnscape doesn’t include Facebook and Twitter or one of their numerous clones, you’re not moving along as quickly as you could.
Stephen Downes’ and George Siemens’ on-going course on Connectivism has a following on Facebook and Twitter. Come visit to see first hand what the fuss is about. That’s where I’m headed now.
Thirty minutes of give and take. Die-hards may keep the conversation going for a full hour. Sessions are recorded. Invite your friends and colleagues to join us. When you arrive, mute your damn phone.
Here are some of the ingredients I think of when conceptualizing an enterprise learning platform:
Hint: Save phone charges by using Skype to call in.
To suggest things you’d like to see discussed, feel free to put them in the chat now:
I’m struggling to complete my reading assignments for George and Stephen’s online course on Connectivism and Connected Knowledge. I can’t let go of a great opportunity to learn but I sense I’m not going to be getting enough sleep over the coming twelve weeks.
The final reading for the first week, Bill Kerr’s challenge to connectivism, got me engaged, and that’s the seat of learning, so I thank him in spite of the fact that I find his criticism shallow and largely irrelevant. I’ll boldface Kerr’s remarks to separate them from my opinions.
simply put, there are other theories around about distributed cognition, so why do we need a new one?
George’s Connectivism combines older theories and new realities to come up with an explanation of learning that fits with today’s realities. Most other theories address yesterday. Connectivism would not be diminished even if Vygotsky got there first.
assertion: “the pipe is more important than the contents (simply because content changes rapidly)” The immediate rejoinder here is that content is important too. And then some will argue, reasonably, that some content is more important than other content. This leads into a discussion of the nature of knowledge (content), is there some knowledge that is more fundamental than other knowledge, what is the difference b/w a new idea of substance and a fad? This is a discussion which has to be had. The slogan leads into this discussion but does not provide an answer to it.
This is a specious argument. Content and context do not exist without one another; they are sides of the same coin. We could spend years trying to answer “What is truth?” The fact that George hasn’t answered it for us doesn’t invalidate Connectivism.
assertion: “the half life of knowledge is declining.” …I would say that at any given time some knowledge is more durable and important than other knowledge - and that “half life of knowledge” arguments obscures that fact. This term is provocative and good a discussion starter but needs more analysis. I am not arguing that there is such a concept as “fundamental knowledge” but that at a given time some knowledge is more important than other knowledge. What sort of knowledge?
Generalities always obscure detail. (You can drown in a river that’s an average of 6″ deep.) Of course, there are foundation elements of knowledge which change at a glacial pace if at all. Reading and writing, critical thinking, and the scientific method aren’t going out of style. However, that’s not why an electrical engineer who doesn’t continue her professional development is out of date and out of business in three or four years. This course is a demonstration that educators thirst for new approaches; I’ll suggest that’s because there are heaps of new things to learn and similar measures of things to unlearn. Good Heavens, how can anyone fail to notice that human progress is accelerating at a mind-boggling pace?
the most important issue is not teachers who haven’t woken up to the potential of the internet yet, it’s those who are blocking the process higher up the chain of control…. what is really needed is for those who want to change education to form a more politically aware movement, something that teachers have been reluctant to do in the past
Agreed. This strikes me as an argument in favor of connectivism, not against it.
This is BIG. Nearly 2,000 people have signed up for George Siemens’ and Stephen Downes’ free online course, me included. Here’s a great map of the course learnscape. Keep up to speed with the course Pageflakes aggregator. And here’s an outline.
Social,
meaning created by each learner (personal)
Distributed
within a network, social, technologically enhanced, recognizing
and interpreting patterns
Influencing factors
Nature of reward, punishment,
stimuli
Existing schema, previous
experiences
Engagement, participation,
social, cultural
Diversity of network, strength of
ties
Role of memory
Memory is the hardwiring of
repeated experiences—where reward and punishment are most
influential
Encoding, storage, retrieval
Prior knowledge remixed to
current context
Adaptive patterns, representative
of current state, existing in networks
How transfer occurs
Stimulus, response
Duplicating knowledge constructs
of “knower”
Socialization
Connecting to (adding) nodes
Types of learning best explained
Task-based learning
Reasoning, clear objectives,
problem solving
Social, vague
(“ill
defined”)
Complex learning, rapid changing
core, diverse knowledge sources
Here’s a wordle of where we’re starting:
Here’s George’s 15-minute intro to how the course works. The environment includes participants’ individual blogs (tagged CCK08), The Daily (a once-a-day summary similar to Stephen’s OL Daily, Moodle for centralized discussion, Twitter feeds, online presentations via Illuminate every Wednesday, and moderated discussions every Friday via UStream.
While the event has only just begun, George and Stephen have already imparted a great deal about connected learning with the collection of tools and philosophy inherent in the design of this course.
A directive from the National Director of Intelligence says the mission has shifted from need to know to need to share.
In this informal interview, Defense Acquisition University’s Mark Oehlert describes how the CIA uses an internal wiki with thousands of articles, a YouTube-like video service, internal blogs, and social bookmarking to enrich (not hide) its findings. Moreover, the CIA now works more closely with its main client, Congress, by providing a context-rich stream of intelligence instead of a standalone “finished” report.
Industrial age workers used machinery to manufacture objects in factories. Now, knowledge workers create value, not on the factory floor, but in what I call a learnscape. A learnscape is the platform where knowledge workers collaborate, solve problems, converse, share ideas, brainstorm, learn, relate to others, talk, explain, communicate, conceptualize, tell stories, help one another, teach, serve customers, keep up to date, meet one another, forge partnerships, build communities, and distribute information. Learnscapes are where and how modern work is performed-including workplace learning.
Natural Pathways
Corporate learning is a continuous, never-ending process. People learn to do their work in small chunks: a tip from a pal, an “ah-ha moment” after trying something new, a factoid from Wikipedia or Google, a glimpse of someone doing something well, or a story told over lunch. But training departments rely on offering workshops and courses, and CLOs fixate on “learning management systems.” These event-driven things are necessary, but they are a small part of improving organizational learning and performance. Rather than investing in new content and control systems, learning leaders will get a higher return from nurturing the natural pathways to learning that already exist in their organizations.
Training events are less important than ever. Today, greater leverage comes from building on-going, largely self-sustaining learning processes such as subscriptions to keep up-to-date technically, persistent online meeting rooms for collaboration, and knowledge bases that support self-service learning. This process orientation focuses on an organization’s architecture for learning, a platform that is a level above its training programs and regulated events. Learning architecture is the foundation for learning that is spontaneous, serendipitous, drip-fed, and mentored—as well as for the formal training that will always be with us.
Learning is the Work
Corporate learning used to be based on the proposition that knowing how people did things in the past was adequate preparation for doing well in the present. This worked when there was generally one way to do a task, and it remained the same for decades. Today, incessant change is baked into everything. About all we can say is that the future won’t be like the past. The focus of learning must shift from what used to work to what works now.
High-quality learning is that which enables a worker to turn in an exemplary performance. This is a moving target. Pragmatic learning involves continually acquiring knowledge, figuring out how to do things, unlearning concepts that have become obsolete, and keeping abreast of change. The product of learning is not something a person receives a certificate for; the true outcome of learning is successful adaptation to the ever-changing environment.
Knowledge Work
In the industrial era, workers operated machinery to produce goods. You could see what they were doing and touch the goods they produced. Time-and-motion studies identified the one best way to do a job; training taught workers how to do it. Successful workers followed instructions. “You’re not paid to think.” Outcomes were predictable. Work was mechanical.
Today, workers apply knowledge to deliver services. You can’t see most of what they’re doing, and their output is largely intangible. There’s always a better way to do a job; learning stretches minds to cope with new situations. Successful knowledge workers are rewarded for innovation and ingenuity. These workers are paid to think. Change is rampant and unpredictable.
Not so long ago, knowledge itself was thought to reside in people’s heads. The new view is that knowledge is collective intelligence, a shared consensual reality that lives among us rather than inside us. We aren’t mere consumers of knowledge; we’re contributors as well. Knowledge work is social. More than just a repository for content, learnscapes are necessary platforms for sharing, relationship-building, and making meaning.
Role of the Architect
Gardeners don’t control plants; managers don’t control people. You can’t make a plant fit into a landscape or a person fit into an organization; you can only prepare an environment to make this a more likely outcome. Our role as learning professionals is to shape that environment, provide nutrients for growth, and let nature take its course.
Learnscape architects nurture organizations to get things done as simply and naturally as possible. Diverse elements, held in equilibrium, make for robust, thriving, vibrant organizations. Learnscapes share many characteristics of the Web: simplicity, clarity, user-centricity, restraint, and attention to detail.
Self-service workers connect to one another, to ongoing flows of information and work, to their teams and organizations, to their customers and markets, not to mention their families and friends because they can easily navigate networks of “small pieces, loosely joined,” the conventions they know from the Internet.
The Business Argument
The landscape architect’s goal is to conceptualize a harmonious, unified, pleasing garden that makes the most of the site at hand. The learnscape architect strives to create a learning environment that increases the organization’s longevity and health and the individual learner’s happiness and well-being.
That’s not enough to win the learnscape architect a commission. Harmony is a tough sell in a topsy-turvy business climate.
Business leaders will only support investing in learnscape architecture when they consider its tangible outcomes, among them:
building productive two-way relationships with customers
fostering a culture of continuous improvement
facilitating teamwork, collaboration, and joint problem-solving
increasing corporate responsiveness to change
cutting superfluous email and bureaucratic bloat
strengthening bonds with all stakeholders
attracting inquisitive, self-motivated talent
keeping abreast of new developments in industry and markets
fostering self-service learning without boundaries
replacing antiquated control systems with enlightened self-regulation
A few organizations have adopted the approach of learnscape architecture although it goes by different names. I am developing a pattern language of learning archetypes to make it easier for organizations to assemble optimal learnscapes. This work is not yet finished nor do I expect it ever will be. In my next article, I’ll explore some of the specifics of putting this approach to work.
About the Author Jay Cross is the founder of Internet Time Group LLC. He is a champion of informal learning, Web 2.0, and systems thinking. He has challenged conventional wisdom about how adults learn since designing the first business degree program offered by the University of Phoenix. His latest book, Learnscape Architecture: Getting Things Done in Organizations, is being released in late August 2008. Progress reports will be available at jaycross.com
An organization’s learnscape is a mash-up of business needs, networks, learning, environmental change, internet values, web tech, and unlearning. (Click for larger image.)
Join me and some pals for a conversation about Enterprise Learning. (It’s a platform, not a program.)
Thursday, September 11, 2008. 10:30 Pacific, 1:30 Eastern; 17:30 GMT
Conference Dial-in Number: (712) 432-1601. Participant Access Code: 391096#
Hint: Save phone charges by using Skype to call in.
Thirty minutes of give and take. (Bring your issues.) Die-hards may keep the conversation going for a full hour.
Sessions are recorded. Invite your friends and colleagues to join us. When you arrive, mute your damn phone. Reference page
Facebook is a runaway success but I’ve never been much of a fan. It struck me as streams of trivia. Another intrusion into my time for reflection on loftier issues. This post by JP Rangaswami opened my eyes as to how Facebook can improve learning in the enterprise.
In large measure, we learn our jobs by watching and copying how other people do theirs. We mimic.
Facebook and similar tools make it easier to watch what others are doing. As JP writes,
It could be as simple as: What does my boss do? Whom does she talk to? What are her surfing habits like? Whom does she treat as high priority in terms of communications received? What applications does she use? Which ones does she not use? When she has a particular Ghost to deal with, which particular Ghostbuster does she call?
What makes her tick. That’s what they want to understand, that’s what they want to learn from.
In the past, the corporate learning function attempted to lift important lessons out of the flow and offer them up in concentrated form. In a well-functioning learnscape, workers can tap directly into the flow itself. They can drink the bouillon rather than choke on a diet of bouillon cubes. Think of it as cognitive apprenticeship based on peering over your mentor’s shoulder.
This type of learning is not just about subordinate-to-boss and succession-plan related, it is also about newbie-to-old-hand, mentored-to-mentor. A picture of the activities and relationships and paths followed, a “let me show you” session, is worth a thousand “let me tell you” sessions.
More and more, knowledge management is going to be about reducing the cost of, and simplifying the process for, letting someone watch what you do. Nonintrusively. Time-shifted. Place-shifted. Searchable. Archivable. Retrievable.
That’s how we are going to create the right learning environments. I think Facebook has the tools to capture much of this in the nonintrusive time-shifted place-shifted shareable way. Let the patterns emerge. Share the patterns. Get inside people’s heads
Excerpt
Conversation about Enterprise Learning
